Context
HM Treasury has published its long-awaited Consultation on the future of the Appointed Representatives (ARs) regime. In announcing the Consultation, the Treasury has stated that the regime plays an important part in the supply of financial services and provides substantial benefits to consumers and businesses. It supports innovation and competition by allowing firms to access financial services markets without the regulatory burden and cost of becoming authorised. The government intends to preserve the AR regime in its current scope.
However, as explained in the policy statement published in August 2025, there is concern that poor oversight of some ARs is putting some consumers at risk. The government intends to address this concern so consumers and businesses can have confidence in the regime and so that the benefits provided by ARs can continue well into the future. In line with the commitment made in the August policy statement, this consultation seeks views on the changes the government proposes to make to the legislative framework for ARs.
Following a review of the regime, the Government has concluded that reform of the overall legislative framework for ARs is needed. This review has taken into account responses to the Call of Evidence issued under the previous administration in December 2021.
Key points to note and next actions
The consultation will remain open for 8 weeks, closing on 9 April 2026, and the three main proposals are set out below. Two were expected following the Policy Statement, but there is one additional proposal which has been the subject of discussion since the Senior Managers and Certification Regime (SM&CR) was rolled out to all firms in December 2018.
Introducing a specific FCA Permission to act as a Principal firm
- In a similar way to the Permission that was introduced previously for approving financial promotions, HMT and the FCA both believe that this will provide more focus and oversight of firms wishing to become Principals. However, existing Principal firms will not need to apply for this and will be “grandfathered” over and given the Permission. However, if an existing Principal with just Introducer Appointed Representatives (IARs) wants in future to take on ‘full’ ARs then it would have to apply for a Variation of Permission to be allowed to take on a ‘full’ AR. It is unclear whether there will be some lesser form of the initial Permission for those existing Principals which only have IARs.
Extension of FOS jurisdiction to ARs
- This is for the rare cases where an AR does something outside the Principal / AR agreement (so for which the Principal has not accepted responsibility), thereby enabling FOS to adjudicate directly against the AR. Unfortunately, the Treasury does not give any examples of where this might arise.
Bringing ARs within scope of the Senior Managers and Certification Regime
- This was omitted from the 2025 Policy Statement but was in the 2021 document. It seems sensible to have one consistent regime rather than Approved Persons at ARs remaining under the old Approved Persons Regime. One area that may create more work is that staff at the ARs will be in scope of the Conduct Rules. Although the Consultation Paper does not go into this level of detail, alongside training (which they should already be doing anyway) Principal firms may need to set up systems and controls to identify and be informed of breaches of the Conduct Rules by AR staff, and whether any resulting disciplinary action needs to be recorded on the principal firms REP008.
- The Treasury is also considering whether the FCA would have the ability to create a new dedicated AR Senior Management Function (SMF) in Principal firms, the holder of which would be held to account for overseeing the Principal’s ARs. We would expect that such a responsibility would already feature on a Senior Manager’s Statement of Responsibilities, but this suggestion would make the accountability more explicit. There is also recognition that SM&CR is also subject to reform, and so any changes in the AR regime will be considered there.